Refer to the Following Data ? Using the Gross Profit Method of Inventory Estimation, the month

question 33

Multiple Choice

Refer to the following data: $\begin{array}{lr}\text { Net sales, first month } & \$ 13,000 \\\text { Normal gross profit as a percentage of sales } & 45 \% \\\text { Inventory, start of period } & \$ 8,000 \\\text { Net purchases, first month } & \$ 7,000\end{array}$ ? Using the gross profit method of inventory estimation, the cost of goods sold would be

• A) $5,850.
• B) $7,150
• C) $7,850
• D) $15,000.

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Definitions:

Historical Beta

A measure of a stock's volatility in relation to the market, based on past performance.

Beta

A measure of the volatility, or systemic risk, of a security or a portfolio in comparison to the market as a whole; it indicates the tendency of a security's returns to respond to swings in the market.

CAPM (Capital Asset Pricing Model)

A model used to determine the expected return on an investment based on its level of risk, as well as the risk-free rate of return and the expected market return.

Risk Premium

The extra return expected by an investor for holding a risky asset compared to a risk-free asset, as compensation for the higher risk.